When can the Boss say “No”!

There has been significant widespread interest in employee’s rights and what constitutes a reasonable request from an employee and the employer’s options in response. Legislation and industrial instruments such as Modern Awards cover key employee entitlements. These include amongst many others:

• the right to request and take annual leave;
• the right to refuse unreasonable overtime hours;
• the right to make a complaint or inquiry; and
• the right to request a flexible working arrangement.

All these key areas have common-sense criteria that govern employee rights but, for employers, when do they have the right to say no? We often hear from our employer clients how they feel the laws are skewed in favour of employees. So, what can employers actually demand from employees?

We examine the criteria and policies employers can put in place whereby they can lawfully refuse to acquiesce to requests from employees or on the other hand demand that employees step up and perform.

When can an Employer refuse a request for Annual Leave?

Section 88(2) of the Fair Work Act 2009 (“FW Act”) provides that “the employer must not unreasonably refuse to agree to a request by the employee to take paid annual leave”. This correspondingly means employers are able to refuse requests for annual leave, if they have a reasonable basis for doing so.

For example, many employers, particularly in the retail and hospitality industries, have particularly busy periods in the year, such as the lead up to Christmas etc. They are able document ‘block-out periods’ within a company policy whereby an employee’s request to take leave during the block-out period can be reasonably denied on the grounds that having ‘all staff on deck’ is essential to the operational requirements of the business.

In Australian Workers’ Union, The v Manildra Stockfeeds Manufacturing Pty Ltd & NSW Sugar Milling Co Op Ltd t/a Sunshine Sugar [2018] FWC 4833 a dispute arose after the employer denied a request for leave.

The employer refused as it coincided with sugarcane crushing season, which from June to December places a “substantial requirement” on it to minimise leave. The employer argued that employees were essential to operations at this time. The Fair Work Commission upheld this argument and found against the employee.

As a starting point, employers should have a well-defined annual leave policy in place. Furthermore, if a request is to be denied, employers should document and communicate the refusal in a timely manner.

As it can be a sensitive subject for employees, it is important for employers to get it right when it comes to refusing request for annual leave.

When can an Employer request Employees to work Overtime?

Under the National Employment Standards (“NES”) an employer can request employees to work reasonable overtime hours and under many Modern Awards, these overtime hours are subject to penalty rates of pay. However, the employee has the right to refuse to work overtime hours if they are unreasonable.

Additional hours are unreasonable when:

• the additional hours would pose a threat to the employee’s health and safety, e.g. fatigue or stress;
• the additional hours would affect the employee’s personal circumstances, e.g. family responsibilities;
• the employer has not given the employee reasonable notice; or
• the additional hours exceed the maximum ordinary working hours and no averaging period is in place.

In Brown v Premier Pet [2012] FMCA 1089, an employee at an aquarium fish wholesaler claimed his employer had contravened the FW Act after he was dismissed for refusing to work mandatory overtime.

Overtime was initially offered on a voluntary basis, which Mr Brown was occasionally working, but a few months into Mr Brown’s employment he was given 14 days’ notice that he would be required to work three hours additional overtime, outside of normal trading hours, once every seven to 10 non-trading days.

Because Mr Brown had commitments outside of work, he was only in a position to work a 38 hour a week job, with only occasional overtime.  He was prepared to work some weekends in exchange for time in lieu (as authorised by the applicable award), but after some negotiation, the parties were unable to reach agreement and Mr Brown was threatened with dismissal.

After Mr Brown referred the matter to the Fair Work Commission, his employment was terminated.

The employer cited during the trial that he was dismissed as he had refused a direction to work reasonable overtime hours.  However, Mr Brown claimed that, in his case, the hours were unreasonable and his refusal to work the involuntary overtime was his workplace right; he successfully demonstrated that the employer had taken adverse action against him.

Employers should exercise caution when requiring employees to work ‘reasonable additional hours’ and should not discipline or dismiss an employee for refusing to work overtime without being able to prove that it is reasonable to require the employee to work additional hours.

Consult with the employee and consider their objections about a mandatory overtime requirement before taking any disciplinary action against them for not meeting it.  When disputes arise about a requirement to work additional hours, the employer should first explore all options to resolve the dispute rather than opting to dismiss the employee for failure to follow a lawful and reasonable direction.

The Right to make a Complaint or Inquiry

Section 341(1)(c) of the FW Act confers the workplace right for an employee to make a complaint or inquiry:

• to a person or body having the capacity under a workplace law to seek compliance with that law or a workplace instrument; or
• in relation to his or her employment.

In essence this mean an employee has a right to commence proceedings, if they have made a compliant or inquiry in relation to their employment and have suffered a detriment as a result. On the face of this provision, almost any complaint or enquiry can lead to a claim by an employee. How does an employer protect itself and when can they say enough is enough?

In Shea v TRUenergy Services Pty Ltd (No 6) [2014] FCA 271, the Federal Court dismissed a former Energy Australia employee’s adverse action claim, accepting that the employee was dismissed because her position was made redundant and not because she had made a series of sexual harassment complaints to management.

Where an employee asserts that adverse action has been taken against them due to their exercise of a workplace right a reverse onus of proof applies.  This means that the employee simply needs to establish that he or she has a workplace right, that adverse action was taken, and it is then up to the employer to demonstrate that the adverse action was taken for a legitimate and lawful reason.  In this case, the employer retained an independent investigator to investigate the employee’s allegations and produce a report which ultimately yielded findings that the employee’s position was made redundant, hence her departure from the employer.

The lesson for employers is a complaint or inquiry needs to be dealt with carefully by employers as aggrieved employees will often find a nexus, real or imagined, with any negative treatment by their employer proceeding from a complaint or inquiry, and claim that prohibited adverse action has been taken against them.

That being said, having a well-defined internal system for dealing with employment related complaints, where a decision-maker is able to provide clear evidence for the reasons underlying any subsequent performance-related measures, including termination of employment will go a long way in assisting an employer in defeating any possible claim.  This should always include meticulously documenting conversations, responses and relevant events.

If an employer has properly considered processes regarding dealing with difficult issues such as under-performance, redundancies, and other management decisions that affect employees, and these are consistently applied, the risk of claims is significantly reduced. In fact, appropriate management action taken in an appropriate and timely manner is the best protection for any business.

The Right to Request a Flexible Working Arrangement

Section 65 of the FW Act provides for employees to request flexible working arrangements and outlines criteria under which the employee can make the request.  For examples, the employee request must be in writing and set out the details of the change sought and reasons for the change.  Furthermore, the employee is not entitled to make the request unless he or she has completed at least 12 months of continuous service to the employer and, if a casual employee, has a reasonable expectation of continuing employment by the employer on a regular and systematic basis.

Following the request, the employer must provide a written response within 21 days granting or refusing the request, and, if the request is refused outlining the reasonable business grounds for refusal.

Reasonable grounds of refusal include, but are not limited to:

• that the new working arrangements requested by the employee would be too costly for the employer;
• that there is no capacity to change the working arrangements of other employees to accommodate the new working arrangements requested by the employee;
• that it would be impractical to change the working arrangements of other employees, or recruit new employees, to accommodate the new working arrangements requested by the employee;
• that the new working arrangements requested by the employee would be likely to result in a significant loss in efficiency or productivity; and
• that the new working arrangements requested by the employee would be likely to have a significant negative impact on customer service.

Although there are certain requirements that must be met when considering an employee request for flexible working hours, this does not mean the employer is required to agree. In fact, if the employer has defensible and reasonable grounds to refuse such a request, this is entirely acceptable.

The Right of Freedom of Speech

The quarrel between the obligation on an employee to discharge their duty of loyalty and fidelity to their employer and their right of freedom of speech has been something of a political football in recent times – particularly in light of the much-debated litigation between Israel Folau and the Australian Rugby Union.

Employers increasingly seek to assert a degree of control over their employees’ ability to express a viewpoint that might be at odds with codes of conduct or company values of their employer – either through platforms of social media, or through public comment in general.

In the recent case of Comcare v Banerji [2019] HCA 23, the High Court recently struck down a ruling that a Federal Government Department unreasonably intruded on the implied constitutional rights of an employee when her employment was terminated over making political tweets.

The employee brought an unlawful termination claim after her employment had been terminated for posting over 9,000 tweets that were “highly critical” of the then Government, the then Minister, the Immigration portfolio and her superior in the Department.  All but one of her tweets were made during her own time (i.e. not at work) and using her own mobile phone.

The Court found that, key to maintaining an apolitical, impartial and professional public service, employees must “at all times” behave in a way that upholds the values, integrity and good reputation of the public service and by terminating her employment, her employer took “reasonable management action”.

Employers have had a degree of success in the courts where employees have published commentary deleterious to his or her employer and there are good reasons why – including the importance of maintaining external stakeholder relationships, an employer’s duty of care to other employees who might be affected by deleterious comments and preserving its reputation within the community – see Little v Credit Corp Group Limited t/as Credit Corp Group [2013] FWC 9642.

To eliminate potential arguments about employers’ rights to constrain employees’ ‘freedom of speech’, employers should incorporate well-defined social media policies within the contracts of employment, outlining the employee’s duty of loyalty and fidelity to their employer and that misuse of albeit private media accounts that have the ability to publish to the broader community, commentary that is deleterious to the employer, has the very real ability to irrevocably extinguish the relationship of trust and confidence such that termination for serious and wilful misconduct is likely to follow.

So, in conclusion, what is the magic secret to allow employers to say no to employees and allow them to properly manage the business. It is quite simple:

• foster a workplace culture of mutual respect and an expectation of high standards,
• ensure that employees know the work expectations and that these are frequently reinforced in a respectful and appropriate manner;
• allow for and encourage managers to manage their employees in an appropriate and respectful manner, and in accordance with appropriate policies;
• actively manage poor performance and behaviours in an appropriate and timely manner;
• make clear the company’s policies and expectations; and
• say no when it is reasonable to do so, and is backed by valid information, consideration and appropriate documentation.

Finally, it is our experience that workplaces that foster mutually respectful interactions with clear behavioural and work expectations, find that employees do not make unreasonable requests and there is very little need to say no.

This alert is not intended to constitute, and should not be treated as, legal advice.